Amazon’s efforts to generate revenue from its Alexa-enabled devices have reportedly resulted in significant financial losses, with the company losing over $25 billion between 2017 and 2021 due to its Echo, Kindle, and other devices. Internal documents and sources familiar with the situation, as reported by the Wall Street Journal, indicate that although Amazon has hundreds of millions of device users, the Echo speakers are primarily utilized for basic functions like setting alarms rather than facilitating purchases.
A former senior Amazon employee expressed concern about the company’s substantial investment in hiring, suggesting that the outcome has been to create a “smart timer” rather than a profitable product.
In light of these losses, CEO Andy Jassy is seeking solutions, and Amazon is reportedly planning to introduce a paid tier for its voice assistant. However, some engineers working on this version have expressed skepticism about its potential impact.
An Amazon spokesperson noted that the company is concentrating on the value delivered through its services, not solely on device sales. The spokesperson emphasized that its Devices & Services division has established several profitable ventures and is poised to continue that trend.
Additionally, concerns have emerged regarding the readiness of Amazon’s new AI-powered Alexa, which was showcased in September. Former employees have indicated that the necessary data and hardware to operate the advanced language model are insufficient. Furthermore, it appears Amazon is prioritizing generative AI development for its cloud unit, Amazon Web Services, over the progress of the enhanced Alexa.
Amazon countered these claims, asserting that its former employees lack accurate information on its current AI initiatives. The company stated that its Artificial General Intelligence team has access to essential resources, including in-house Trainium chips and Nvidia GPUs, while reaffirming its commitment to developing the best personal assistant available.